Procurement and the Digital Supply Chain

Business Solutions Today’s Chief Procurement Officers (CPOs) are coping with shorter product life cycles, customer demand for more value and the need for increased supply chain agility and flexibility.

Bill Michaels

Vice President of Operations, Americas for the Chartered Institute of Procurement & Supply (CIPS)

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The procurement and the supply chain professions have changed more in the past five years than they have the previous 100 years. Everything is moving at the speed of Amazon as customers expect instant availability of products, inventory-less systems and continuous focus on cost and value improvement and innovation. The days where lead times were long, the longevity of products optimized manufacturing processes and innovation was led by corporate R&D functions are long gone.

Data scientists rule

CEOs expect procurement to deliver speed to market, revenue generation, supply chains aligned with the corporation’s business strategy, and integrated connected supply chains. It is not surprising that data scientists are in high demand across all supply chain functions. Data analytics makes the difference between a winner and loser in the competitive marketplace.

It is no wonder that machines are replacing the work done by humans as technology continues to improve. The need for people with transactional and tactical skills is diminishing. Procurement professionals will rely on computers with artificial intelligence to locate suppliers across the globe, develop information requests, send out requests for proposals and analyze them to enable sourcing professionals to select the best supplier option that aligns with the business plans.

The internet of things

Future supply chains will not rely on forecasts, demand plans and production scheduling as in the past. The internet of things will pass along real-time data from end-customers sales enabling the organization to plan in real time with actual sales data. Some companies have developed inventory systems where drones armed with cameras reading inventory data can travel the warehouses and distribution centers several times daily locating and reporting on inventory. This eliminates the need for cycle counts and annual inventories to understand investment, obsolesce and locations.

The Robotic Process Automation (RPA) of procurement will provide the ability for individuals in an empowered organization to provide self-service procurement. The systems will have easy to buy processes, catalogs, multi-product storefronts, same or next day delivery, mobile access, chatbots to guide the buying process, data analytics to analyze the spend, virtual assistants and AI supported functionality. The hard part on the procurement side will be to get the programs in place and develop systems to support the process. The suppliers will have control of their destiny with dynamic payment terms and access to the system to understand when payments will be made, and any discrepancies can be handled automatically.

The need for people with transactional and tactical skills is diminishing.

Digital disruption

The future for procurement and supply chain management is bright and exciting as we enter more automaton in the digital era. The roles of the digital future will be more strategic and depend on the alignment of the supply chain, strong planned supplier relationships, managed investments and faster product cycles with speed to market as the driver for competitive advantage.

Automation and analytics are a form of digital disruption. Talent acquisition, management and retention will be the priority in many firms. Unfortunately, the changes will also displace a number of existing talent if they can’t make the grade.

What will it take to prepare you, your team and your organization for the digital supply chain?